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Financing and anti-corruption

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 Corruption - in operation and maintenance

•  Corruption – in operation and maintenance

  Card 63
  Topic: Financing and anti-corruption
  

  • How does corruption occur during the operation and maintenance of infrastructure?

    • It is widely recognised that corruption occurs during the early stages of a project, e.g. project development, procurement and construction.  Corruption is also common during project operation and maintenance, which can seriously impact project outcomes.
      
      The key point is that there is little positive gain in the long term from providing new infrastructure, if it is going to fall into disuse and disrepair through improper operation and lack of maintenance.
       
      Therefore it is imperative that anti-corruption measures are enforced in order to ensure that infrastructure is maintained and operated effectively.
      
      Neglect of maintenance is potentially the most serious form of corruption as it can lead to environmental damage, loss of quality of life, personal injury and even death.  Secondary consequences can include loss of earnings and loss of education through ill health e.g. due to ingesting poor quality water when the source is not being maintained properly.
    • Some examples of where corruption during operation and maintenance can have an impact on infrastructure effectiveness include:
      
      ■ Money from toll roads not spent on maintenance, resulting in the condition of the road deteriorating significantly
      
      ■ Water pumps and taps falling into disrepair through improper use and/or lack of maintenance
      
      ■ Pollution to water courses by sewage flowing untreated into water courses as sewerage systems are allowed to fall into disrepair
      
      ■ Illegal connections to water and power supplies reducing capacity and reliability
      
      ■ Flooding due to drainage channels becoming blocked
      
      ■ Spread of disease from build up of solid waste despite sub-contractors being paid to collect and dispose of it
      
       

  • Understand corruption during operation and maintenance, and prevent the opportunity

    • Examples of corruption during the operation and maintenance (O&M) phase of a project include:
      
      ■ Bribes paid to win O&M contracts, and fraudulent practices leading to inflated O&M costs: e.g. due to corruption the asset may be dangerous or inadequate on completion which may increase O&M costs
      
      ■ Nepotism and abuse of power by the project owner awarding the O&M contract to friends of family
      
      ■ Overcharging for O&M
      
      ■ Neglect of maintenance
      
      ■ If the contractor that built the asset is the only company capable of maintaining it, they will have a monopoly of supply during the O&M period. This makes it difficult to compare costs, and increases the opportunities for concealing bribes and inflating claims
      
      ■ A defective asset may prevent the infrastructure from operating, or from operating to full capacity, thus reducing the operating profit
    • Solutions for addressing corruption during project operation and maintenance (O&M) include:
      
      ■ Use of procurement procedures for O&M contractors which favour companies that act ethically, and monitor them after contract award
      ■ Engage local communities to undertake O&M – a sense of ownership towards the project and sense of duty towards the rest of the community could reduce the tendency towards corrupt behaviour
      ■ Reward ethical behaviour
      ■ Raise awareness through promoting/providing anti-corruption training
      
      References and further reading:
      ■ Transparency International
      ■ Anti-Corruption Resource Centre
      ■ Global Infrastructure Anti-Corruption Centre
      ■ UK Anti-Corruption Forum
      ■ Construction Sector Transparency Initiative
      ■ Holloway, R NGO Corruption Fighters’ Resource Book - How NGOs can use monitoring and advocacy to fight corruption